I recently did an inspection for an appraisal on an FHA refinance loan. It was an older home that had been undergoing some updates and renovations. One of the biggest problems I see on older homes, and one which this home had, is peeling and chipping paint. This is not an issue with conventional loans (unless it is a specific investor requirement), however it can be a deal breaker with FHA loans. If it doesn’t kill the deal it can at least delay the closing.
Peeling and chipping paint is a health risk and falls under the “Safety, Security, and Soundness” realm, which is why it is an FHA requirement for this condition to be corrected. According to the U.S. Department of Housing and Urban Department (HUD) the general requirements are as follows:
“For all properties built before January 1, 1978, the appraiser must inspect ALL interior and exterior surfaces, such as walls, stairs, deck, porch, railing, eaves, windows, doors, fences, detached garages and other outbuildings and appurtenant structures for defective paint surfaces (i.e. chipping, peeling or flaking paint) and report defective conditions in the appraisal report.”
The appraisal would have to be done “subject to” the peeling paint being corrected. It is important to know why the January 1, 1978 date is crucial. Prior to this time paint was made with lead in it; and lead is toxic if it is ingested. Because of this it must be removed per FHA guidelines. To find out the exact procedure to use you can go to the HUD website at HUD.gov, but the short version is this: The paint must be properly removed from the surface AND totally cleaned up with no signs of it left on the ground. The bare surface must then be repainted with a non lead based paint. If this can be done before the appraisal inspection, it can save a lot of time and cost since the appraiser will not have to go back to the property to verify it has been done. You can save yourself from a big headache by doing a little bit of pre appraisal inspection homework.
Related posts:
- How NOT to dispose of peeling paint for an FHA appraisal
- FHA Appraisal Inspections Revisited- Crawlspace and Peeling Paint Under The Spotlight
- Birmingham, Alabama Real Estate Agent Tips: What is an MPR?
- What Red Flags Can Kill A Birmingham, AL Area FHA Appraisal?
- FHA Tip: Turn The Water On To Save Your Borrower Money
Great post with great information. In my experience, chipping paint is the most common reason why one of my FHA appraisals is marked “subject to”.
Bryan,
That is the same with me. I have had two recently, which has delayed both closings. Maybe with more info. out there this will cut down on this common problem.
Oh! This is perfect! Thanks for dispelling severalsome
confusion I had heard regarding this lately.
Your welcome, there is a lot of confusion on this. I hope I have made it more clear.
But what if the house has already been scraped and painted subsequent to 1978? I have a deal where the house has been inteh family since it was built in 1978 and subequent to 1979 has scraped and repainted the house. The appraiser on the purchase happpening now notes peeling exterior paint and that it must be scraped and repainted. He is presuming that it has never been done since 1978. If sellers will provide an affidavit that the house was scraped and repainted since 1978 can we get around this FHA exception to closing the loan?
Joe,
The affidavit would be helpful, however the appraiser is required to note the condition of the painted surfaces. A lot of times it is up to the loan underwriter to make the final call as to whether the affidavit is sufficient. I am not sure how much it is in your area, however you could get the paint tested to see if lead is present. Depending on the cost this may be the last resort. I would see if the affidavit is good enough, if not, compare the cost to repaint against the cost of testing the paint. Hope this helps.
FHA Appraisal Inspections Revisited- Crawlspace and Peeling Paint Under The Spotlight | Birmingham Appraisal Blog // Apr 22, 2011 at 11:41 am
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